News has emerged that Microsoft may consider developing its own handheld gaming device which also plays music and movies - despite many previous statements to the contrary.
According to Business Week, Microsoft has already set up a team to look at the pros and cons of such an idea. Although Xbox boss Peter Moore would not confirm this, he did tell the website that if such a device is to go into development, "It can't just be our version of the iPod."
As a result, the multimedia device would also play games - and would be marketed under the Xbox label. "I think the brand is an opportunity," Moore said.
Whether such a device will ever make it to market remains to be seen. Microsoft has repeatedly stated in the past that it has no interest in producing handheld hardware, since the company already makes a healthy profit selling handheld editions of Windows to hardware developers.
However, as the Nintendo DS and the Sony PSP continue to sell well, and the popularity of the iPod shows no sign of waning - more than 65 per cent of handheld devices sold in the US last year were Apple products - it's not inconceivable that Microsoft could be seeking a piece of the pie.